The Washington Post ran a very bold headline that simply said, “Don’t save Social Security.” The writer argued that we should stop trying to fix this program and simply start over. That is a huge, bold claim.
Before we move on, I would just like to know how you feel about this. Do you think we should save Social Security? What would that mean to you if we didn’t? I would love to hear your thoughts on this in the comments because I know this is a very important discussion to have.
This is a transcript of our video. You can watch the full video on our YouTube channel: Low Income Relief.
What Social Security Does And Why It Matters
Of course, as we dive in here, Social Security is a wide umbrella of different programs. This is the federal program that sends monthly checks to retired workers, disabled individuals, and surviving family members. It is an absolute lifeline for millions and millions of people.
If you rely on it, then you’ve probably already heard that the Congressional Budget Office is now estimating that the program’s trust funds could run out of money by 2032. They’ve had this deadline going for a while. It keeps getting closer and closer. And guys, it really isn’t that far out now. We’re talking about this happening during the next presidential term. This is just a few short years away.
When that happens, Social Security will have to become fully dependent on payroll taxes because there won’t be a trust fund to help make up the difference between what Social Security is bringing in and what it’s paying out. They’re saying that when that happens, Social Security would only be able to pay about 75 to 80 cents for every dollar that was promised to you.
That means smaller checks immediately. Not zero, but still noticeably less—and certainly enough to create some severe strain in your budget.
The Argument To Scrap The System
Because of this, experts all over are telling Congress and the government that it’s time to do something. Some sort of action needs to be taken on Social Security in order to shore up this program and make sure that people will still be able to get by.
But the Washington Post made a different argument. They said we should scrap that system and start over. The writer says that this kind of retirement system doesn’t really make sense, and they claim that most Americans would not choose the current system if they could start from scratch today.
A lot of the data that underpins that decision comes down to this: the poorest 20% of seniors only get about 7% of all Social Security benefits, whereas the richest 20% of seniors are receiving almost 30%—about one-third of all those benefits.
We know that Social Security is paying out about $1.6 trillion per year, but still about 6% of seniors live in poverty. So the author makes the case that this is probably not the most efficient system.
Why Many People Disagree
If this feels unfair to you, you’re certainly not alone. A lot of readers were pushing back on this. Those 6% of seniors don’t really have enough money to get by. They’re struggling to cover all of the basics like food, rent, medicine—all of the crucial things that wealthier seniors may take for granted.
A Radical Alternative Proposal
There is a radical idea that has been proposed that is substantially different than the system we currently have. The Congressional Budget Office, which is a nonpartisan government research office, suggested a bold alternative.
They propose giving every American over age 65 a flat annual benefit equal to about 150% of the poverty line, which is about $32,500 for a couple. The result would be no insolvency in the system, and senior poverty could be eliminated.
That is a pretty powerful promise. I would love to know if you think this would be a better solution. I know a lot of you get less than that right now in benefits, and this could be a substantial boost for you. For higher-income earners, it may actually be a reduction.
Simpler Fixes To Strengthen Social Security
Of course, there are simpler fixes that don’t require us to completely gut Social Security. A lot of people talk about lifting the cap, which is something that I honestly support as well.
Right now, people only pay Social Security taxes on the first $184,500 of income. Earnings above that are not taxed. For your average worker, that means all of their income is taxed. But for millionaires and billionaires, they hit that mark pretty early—sometimes within the first weeks or even days of the year—and then the rest of their income is not taxed.
One comment on the Washington Post article reflects a lot of what I’ve seen from you guys. They said, “Simply have billionaires contribute to Social Security on an uncapped basis. Problem solved.” And that is definitely something that could help shore up that insolvency.
A Four-Part Fix That Could Work
Ultimately, I think we can all agree that Social Security deserves a solution—whether that’s reforming what we currently have or introducing something more stable. I think we can fix Social Security without gutting it, but it’s important to make sure we do it the right way.
There’s actually a tool you can use called the Reformer, run by the Committee for a Responsible Federal Budget. It’s a fun interactive tool that lets you test different fixes and see how they affect Social Security’s finances.
I’ve played around with the Reformer a lot, and there is a combination of changes that could more than close the shortfall and even start putting money back into the system—without cutting any benefits for low-income retirees.
The four-part fix that I like best is:
- Eliminating the tax cap so high earners pay Social Security taxes on all of their income
- Taxing benefits for higher earners (those making over $100,000)
- Means testing top benefits so higher-income retirees receive reduced benefits
- Slowing benefit growth for top earners, including adjustments to COLA increases
I know means testing isn’t ideal for higher-income earners who want to get their money back. But realistically, those in higher brackets often have a stronger safety net.
Because we’re here at Low Income Relief, my heart is really with seniors who are struggling to survive and don’t have other options. Means testing top benefits may not be perfect, but it helps protect the most vulnerable.
Protecting Low-Income Retirees
Under this approach, low-income retirees would see no cuts. The adjustments would fall on those with higher earnings or other wealth they can rely on. That’s very different from an across-the-board cut if the trust funds run out, which would hurt the most vulnerable the most.
What Do You Think?
Those are just the solutions I found. I would love it if you went and played with the Reformer tool and told me what solutions you think are best.
If you’re worried about your benefits, you are certainly not alone. I know so many people are concerned.
Don’t forget to check out our other videos for all of the changes coming to Social Security and Medicare right now—because there are a lot. And I’ll see you there.
